Rambus, MediaTek in Licensing Deal - Analyst Blog
March 06 2012 - 8:30AM
Zacks
Rambus Inc. (RMBS)
signed a patent licensing agreement with MediaTek Inc. for an
undisclosed sum, yesterday. Per the terms of the agreement,
MediaTek can use Rambus’ patented technology for its integrated
circuit products for five years. Rambus will receive royalty
payments based on the shipment of these devices during the contract
period.
In 2010, Rambus accused MediaTek of
unlawfully using its patented inventions. But last Friday, a judge
at the International Trade Commission (ITC) negated the claims and
gave the plaintiff a clean chit.
Keeping aside the judge’s final
ruling, which is due in July, both companies reportedly announced
that they have settled all previous claims mutually.
Despite a legal tussle, MediaTek
opted for Rambus’ technology. Customers are demanding utmost
flexibility in electronic products. As MediaTek is a leading
System-on-Chip (SoC) provider, innovative technology licensed from
Rambus will help the company to deliver advanced chips to be used
in computer or electronic goods.
We believe that the deal is indeed
good news for Rambus. But there remains a possibility of paying a
penalty held by the court as the final decision comes.
Before this one, Rambus has sealed
licensing deals with NVIDIA Corp. (NVDA) and
Broadcom Corp. (BRCM). Though continuous licensing
deal wins for Rambus is not new, anti-trust or patent infringement
battles continue to make life difficult.
Rambus has won a favorable ruling
from the ITC for lawsuits against Nvidia, Hewlett-Packard
Co. (HPQ), Asus and Samsung. But it lost legal battles
against Micron Technology Inc. (MU), Hynix,
LSI Corp. (LSI) and
STMicroelectronics (STM). The company’s shares
lost significant value on the news of losing the case as the
negative outcome blew investor sentiment. Shares fell 5.29%
yesterday.
Despite the current volatility in
the share price, we believe that Rambus’ growth story remains
intact. But we remain on the sidelines given the Fed’s decision to
declare three of its patents invalid. This could impact its growth
to the extent that it is dependent on the three patents. Moreover,
Japanese chip-maker Elpida’s declaration of bankruptcy is also a
concern for Rambus, as the company accounted for around 10.0% of
its annual revenues. This would be a direct hit to its patent
licensing royalty.
Currently, Rambus has a Zacks #3
Rank, indicating a short-term Hold rating.
BROADCOM CORP-A (BRCM): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
LSI CORP (LSI): Free Stock Analysis Report
MICRON TECH (MU): Free Stock Analysis Report
NVIDIA CORP (NVDA): Free Stock Analysis Report
RAMBUS INC (RMBS): Free Stock Analysis Report
STMICROELECTRON (STM): Free Stock Analysis Report
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